AuthorEarnings: Brought To You By Us, Your Breathless Media

My Hype Is Better Than Your Hype

Sometimes it seems that almost no one in the publishing industry can deliver a message without a sticky gloss of agenda-laden hype on it.

The latest AuthorEarnings report, prepared by the author Hugh Howey and his technologist colleague known as “Data Guy,” is a good case in point.

Rather than opening with the interesting news of what this highly respected pair have found in their most recent quarter of evaluation, they lead with a sarcastic recitation of ways they assert that the Association of American Publishers (AAP) and the traditional industry have incorrectly characterized the ebook market in the past 18 months or so.

The first thing you see is a World War III headline at the top: “AAP Reports Own Shrinking Market Share, Media Mistakes It for Flat US Ebook Market.”

I have a lot respect for Howey and Data Guy, as they know. They’ve done the industry a lot of good by offering another consistently generated and interpreted set of reports, an alternative view (not without detractors) to that produced by the publishing establishment and research companies that use publishing’s numbers, mainly Nielsen.

Hugh Howey and “Data Guy” estimate that “traditionally-published authors are barely earning 40 percent of all Kindle ebook royalties paid, while self-published indie authors and those published by Amazon’s imprints are taking home almost 60 percent.”

The problem, however — and they made this the first factor here, I didn’t — is that AuthorEarnings reports now are being delivered as our-hype-vs.-their-hype. That’s a mistake.

The original AuthorEarnings mission, which you can read on the About page is this:

Our purpose is to gather and share information so that writers can make informed decisions. Our secondary mission is to call for change within the publishing community for better pay and fairer terms in all contracts. This is a website by authors and for authors.

When you put your hype before the horse, the value of what’s in the cart is tainted and maybe completely missed. Many readers won’t make it to what these good guys have to report.

They won’t thank me for saying this, and I wish I didn’t have to. But I think that Data Guy and Howey deserve a better presentation than they’re giving themselves.

[pullquote]”Today, 34 percent of indie author earnings from the Amazon store—over a third of indie Kindle revenue—takes the form of KU payments for pages read: in July, KU accounted for 2 billion pages (KENP) and $11.5 million dollars in direct author compensation.”September 2015 AuthorEarnings Report[/pullquote]

The Media Did It

Howey and Data Guy contend—and they’ll get no argument here—that major publishers are inflating ebook prices, and then announcing that ebooks aren’t selling as well as they were. Welcome to the party. This has been a topic of wide conversation for many weeks. This price was set by the publisher. We all know the line on Amazon sales pages. Agency pricing is widely understood to be holding established houses’ ebooks at prices the readership may consider too high. From commentator Mike Shatzkin in The Publishing World Is Changing, But There Is One Big Done That Has Not Yet Barked (Mike likes those long headlines) to Thad McIlroy in Why Are Ebook Sales Falling?, there’s an understanding at least of the fact that $12.99, $13.99, and $14.99 ebook prices are being pinned on the majors’ books by their own publishers in full knowledge (if not admission) that these are not “popular prices” for digital reads.

It’s thought that traditional publishing, then, is ceding—either deliberately or through a miscalculation—some of the market share they had, or could have had, in ebooks.

The rationale behind this trend in pricing is where there’s some debate.

Are publishers hoping to quell the rise of ebooks? McIlroy thinks that’s it. He writes that he thinks publishers are jacking up their ebook prices:

Because the overall success of any new title is significantly influenced by its presence in retail outlets. Depending on how you define “book retail outlets,” and how popular the title, there are some 5,000 locations in the U.S. that will prominently display proven and potential bestsellers. Within the current publishing business model this exposure is an essential part of the sales ecosystem. If ebooks had continued to capture market share at the rate they were doing until a few years ago the book retail structure would now be in tatters. And established (mid- to large-size) U.S. publishers do not have a business model for dominating online sales in the same way that they can dominate total product sales with the existing retail component.

In short, he believes that publishers are protecting print by pricing their own ebooks out of the market because they can’t compete effectively in an ebook environment. He’s not alone in that analysis. He offers and disposes of three other possibilities, too, on the way to choosing the one about print-protectiveness. Here he is raising and rejecting those possibilities:

The supply is insufficient for the demand: this is not a possible scenario with a digital product.

Legal considerations/government requirements: the agency agreement does not address price levels, only the enforceability of retail price choices.

Price elasticity: publishers are finding that their overall ebook revenue is higher at current price points that it had been at lower price points: this is clearly a possibility, although common sense seems to suggest ‘nay’.

Choose your reason. The fact of higher prices “set by the publisher” is on the sales pages, we all see it.

For his part, Shatzkin, an “influential industry veteran” indeed, as the AuthorEarnings fellows name him, makes the interesting observation that lower Big Five ebook prices could be a challenge for indies:

If publishers lower their prices to compete more effectively with indie-published books and the subscription offers, their revenue will go down but so will the indies’, who will lose some of the benefits they now gain from their pricing advantage.

[pullquote]”Traditionally-published ebooks make up 42 percent of Kindle ebooks purchased in the US.”September 2015 AuthorEarnings Report[/pullquote]